Netflix Inc (NFLX) – Cuban or Lamensdorf Way?

Ever since the commencement of bearish phase of the US stock market, there have been several conflicting opinions but one company which has been attracting a lot of attention is Netflix Inc (NASDAQ:NFLX). While on CNBC, there were conflicting views from in-house market experts as regards the investment potential of the company, the debate has now moved on to a much larger sphere. The latest statement in favor of the company has come from Mark Cuban, an American millionaire, and to counter it, Brad Lamensdorf of Ranger Equity has declared the company as a disaster.

Owner of Dallas Maverick, 56-year old Mark Cuban added 50,000 shares of Netflix Inc (NASDAQ:NFLX) to his portfolio and justified his action by the following statement –

“I’m buying NFLX stock. At half of YHOO, 10BTwitter and small pct of major media companies, someone will try to buy them.”

Given that the share value of the company has fallen by more than a fifth of its value over the last two days, the price that Cuban must have paid was probably the lowest in five months time period. This downtrend is attributed to the $1 price hike levied by the company for new customers as officials feel that it acted as an obstacle where an exponential increase in viewership was concerned. In a letter to shareholders, the CEO and CFO of Netflix Inc (NASDAQ:NFLX) said –

“As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago. Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the U.S.”


Challenging this judgment is Brad Lamensdorf of Ranger Equity Bear ETF who described the company as a disaster which was surviving solely on the basis of its high subscription charges. He went on to point out that while returns within USA were headed towards zero, the international segment is yet to generate revenue and owing to these reasons, the future of Netflix  Inc (NASDAQ:NFLX) is indeed uncertain.

In spite of a disheartening forecast, Cuban remains firm in his decision to buy saying that –

“The value of nflx is so much more than its price that even if a buyer wrote a 8b check to pay it off its a bargain.”

Since he is second to another American billionaire Carl Icahn, there might be something to Netflix Inc (NASDAQ:NFLX) than what meets the eye.

This article has been written by Vinita Basu.

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